Broadcom readies record bid for Qualcomm
Communications chipmaker Broadcom Ltd is planning to unveil a bid for smartphone chip supplier Qualcomm Inc by Monday, three sources familiar with the matter said on Friday, an attempt to create a roughly $200-billion company through the biggest technology acquisition ever.
A tie-up would combine two of the largest makers of wireless communications chips for mobile phones and raises the stakes for Intel Corp., which has been diversifying into smartphone technology from its stronghold in computers.
The value of Broadcom’s bid has not been decided, though an offer in the range of around $70 to $80 per share is being contemplated, one of the sources said. At $70 a share, an offer would value Qualcomm at $103 billion.
Qualcomm is not aware of the details of Broadcom’s bid, and it is far from certain whether it will entertain this deal, the sources said.
“It’s a smart move that would make Broadcom into a tech juggernaut,” said GBH Insights analyst Daniel Ives.
Qualcomm declined to comment, while Broadcom did not immediately respond to a request for comment.
The bid comes as Broadcom plans to move its headquarters to the United States from Singapore. US President Donald Trump commented on the move on Thursday at a White House event where chief executive Hock Tan cited Republican tax efforts. It is currently incorporated in Singapore and co-headquartered there and in San Jose, California.
Broadcom’s acquisition would be the most ambitious move by Tan, who has turned a small, scrappy chipmaker into a $100-billion company with a string of deals, since he took the helm a decade ago.
The proposal comes as Qualcomm is trying to close its pending $38-billion acquisition of NXP Semiconductors NV.
NXP is one of the largest makers of chips for vehicles and expanding into self-driving technology, and Broadcom also is open to acquiring NXP, according to one of the sources.
Antitrust officials, who also would have to approve a Broadcom-Qualcomm deal, are still considering Qualcomm’s purchase of NXP. Activist investor Elliott Management Corp has taken a large stake in NXP and has been pushing for Qualcomm to pay a higher price for the company, Reuters has reported.
Qualcomm, an early pioneer in mobile phone chips, supplies so-called modem chips to phone makers such as Apple, Samsung and LG that help the phones connect to wireless data networks. Broadcom is also a major supplier to many of the same companies for Wi-Fi chips.
Broadcom’s Wi-Fi chips are essentially a commodity and priced much lower than the modem chips.
The only other major supplier of high-end chips is Intel Corp, which supplies about half of the modem chips in Apple’s iPhones. Purchasing Qualcomm would give Broadcom a much more lucrative line of business in the mobile phone markets.
Broadcom is considering a cash and stock offer of about $70 a share, Bloomberg reported earlier.
Broadcom is looking to complete its $5.5 billion purchase of Brocade Communications Systems Inc while Qualcomm is in the process of closing its deal for NXP. It is working with five financing banks to offer a significant cash component for its bid, according to one of the sources.
Qualcomm faces a multinational legal battle with Apple over Qualcomm’s licensing terms to Apple and Apple is considering dropping Qualcomm chips from its phones.
Qualcomm sells chips but also licenses a patent portfolio of related technologies. It requires customers like Apple and Samsung to license its patents if they use its chips, typically asking for a percentage of the price of the final device.